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Institutional Power and Political Stability – Three Key Interventions by the Bank of England (2016-2024)

Pouvoir institutionnel et stabilité politique: trois interventions clés de la Banque d’Angleterre (2016-2024)
Laurence Harris

Abstracts

This article examines how the Bank of England contributed to mitigating political instability in the UK between 2016 and 2024, a period marked by Brexit, rapid ministerial turnover and economic volatility. Using historical and discursive institutionalism as theoretical frameworks, the study analyses the Bank's interventions during three critical episodes: the Governor’s reassuring response following David Cameron's post-Brexit referendum resignation; the Bank's stabilising role during Liz Truss's mini-budget crisis; and its contested deployment of quantitative easing. Through analysis of the Bank's coordinative discourse among policy actors and communicative discourse with the public, the research demonstrates how this 330-year-old institution has deployed institutional authority and strategic communication to maintain financial and political stability during a period of enduring upheaval. The study reveals the complex interplay between technocratic expertise and democratic accountability, showing how the Bank's discursive power and perceived neutrality have allowed it to manage leadership vacuums during political crises. While these interventions helped preserve stability, they raise important questions about the democratic legitimacy of central bank independence and the concentration of macroeconomic power in unelected institutions. The findings contribute to our understanding of how institutional resilience can both temper political instability and potentially reconfigure power dynamics in liberal democracies.

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Introduction

  • 1 The laureates were Daron Acemoglu (Massachusetts Institute of Technology, Cambridge, USA), Simon Jo (...)
  • 2 Rachel Reeves, The 2024 Mais Lecture, Baynes Business School, 19 March 2024, https://labour.org.uk/ (...)

1The 2024 “Nobel Prize in Economics” went to researchers who investigated why nations succeed or fail and identified political and economic institutions as providing part of the answer.1 The award served to highlight the critical importance of institutional analysis in the fields of politics and economics at a time when democratic institutions are losing support among US and European populations, at large. In the UK, the Brexit referendum was preceded and followed by a sustained attack on institutions which continued during successive Conservative governments between 2016 and 2024. When Rachel Reeves, then Shadow Chancellor, delivered her Mais lecture to the City in March 2024, she advocated, as a key plank of Labour’s vision in the run-up to the upcoming General Election, “Growth achieved through stability — built on the strength of our institutions”.2 Ending the chaos and repairing the trust in institutions appeared to resonate with enough of the electorate to deliver the party’s decisive electoral victory on 4 July 2024.

2Looking at the functioning of British public life in recent years, however, it could also be argued that the effects of political instability have been tempered over the eight years prior to the General Election by the UK’s political system of institutions. Central to this framework are several key institutions such as the Supreme Court, the Office for Budget Responsibility and the Treasury, which came repeatedly under pressure, yet successfully withstood the onslaught of exceptional events and circumstances. Due to constraints of time and space, this study focuses on one such institution that, while typically not seeking out the spotlight, found itself frequently at the centre of political events between 2016 and 2024: the UK’s central bank. In investigating how the Bank of England, a 330-year-old institution, may have mitigated political instability, it is essential to explore the root causes of such instability and the role of the actors tasked with maintaining stability.

3While campaigning to leave the EU in 2016, Michael Gove, the then Lord Chancellor, famously dismissed “experts”, thus contributing to spreading the vision of the institution as elitist and run by unelected technocrats, disconnected from the people they were meant to serve.3 In line with other Western liberal democracies, the key responsibilities for monetary and financial stability were handed over in the UK to the Bank of England in 1997 while the government retained part of its decision making powers in appointing the head of the central bank and setting the target rate of inflation. However, the institution’s operational independence has been questioned in the wake of a series of events causing political turmoil, leaving a sense of confusion and loss of public faith in British politics post-Brexit. This study tackles broader questions of legitimacy and power dynamics between institutional experts and government.

4The first section of the article outlines the theoretical framework and methodology underpinning this study. The institutional theory guiding our inquiry derives from both historical and discursive institutionalism. The methodology involves examining a corpus comprising Bank of England discourse. The sections that follow revolve around three instances between 2016 and 2024 when the Bank of England played a pivotal role in seeking to maintain a measure of political stability while fulfilling its dual core mandates of determining monetary policy and maintaining financial stability. First, in the aftermath of the Brexit referendum and Prime Minister David Cameron’s resignation, Governor Mark Carney’s swift and reassuring statement emphasized the Bank’s readiness to safeguard financial stability, helping calm markets amid political uncertainty. Secondly, during Liz Truss’s short-lived premiership, the Bank intervened following the 2022 mini-budget crisis triggered by unfunded tax cuts. The Bank’s £65 billion emergency bond-buying programme stabilised markets, exposing the limits of government policy when disconnected from institutional coordination. Thirdly, the Bank’s deployment and evolving communication around quantitative easing (QE) reflected its growing discursive power. While QE was meant to stimulate lending and investment, it attracted criticism for exacerbating inequality and fuelling asset bubbles. Through coordinative and communicative discourse, the Bank has sought to justify its policies, broaden public engagement, and maintain legitimacy. The study highlights how institutional and discursive strategies have allowed the Bank to assert stabilising authority during crises. However, growing concerns over technocratic governance and central bank independence suggest that the very mechanisms preserving order may risk undermining democratic accountability in the long run.

Theoretical and methodological framework

5Understanding how the Bank of England interacts with its political environment as an institution, and the effects these interactions may have on political stability necessitates prior insight into institutional research, the interrelationship between institutions and organisations, and how the discourse and ideas they generate shed light on institutional resilience.

  • 4 Wolfgang Streeck and Kathleen Thelen, Beyond continuity – Institutional Change in Advanced Politica (...)
  • 5 Douglass C. North, Institutions, Institutional Change and Economic Performance (Cambridge, Cambridg (...)
  • 6 Ibid., pp. 94-95.
  • 7Broadly speaking, political rules in place lead to economic rules, though the causality runs both (...)

6Institutions may be defined as “building-blocks of social order” representing “collectively enforced expectations” and leading to predictable patterns of behaviour.4 The central bank of the UK is an institution as it holds a state monopoly on issuing legal tender. The term “institution” is also often used to refer to a category of corporate agents, rather than just the rules themselves. Douglass C. North refines the distinction between organisations, which are groups of individuals sharing collective goals, and institutions, which define those goals. He describes institutions as “humanly devised constraints” that “structure incentives in human exchange, whether political, social or economic”: in other words, institutions are “the rules of the game”, encompassing formal written rules as well as informal codes of conduct, while organisations are “the players” or agents holding the relevant skills and bound by a common purpose.5 The institutional framework that emerges from interactions between people in society through efforts to reduce uncertainty is shaped by dominant beliefs, which in turn begs the question of how dominant beliefs are formed and how they shape interactions. North refers to the set of possible interactions between institutions and organisations as the “institutional matrix”, within which the state holds an essential role in producing and enforcing institutions and which tend to follow “path dependent” trajectories.6 Within the UK’s institutional trajectory, which is defined by the pre-eminence of Parliament, representative democracy is linked to political and economic organisations that draw their capabilities for action from institutions, which in turn result from complex historical processes. As an institution and an organisation, the Bank of England also straddles both the economic and political spheres.7 Although democratic governments started delegating part of their macroeconomic policy to independent central banks in the 1990s, these institutions remain linked to elected power via the appointment of their heads. The Governor of the Bank of England is appointed by the monarch, based on the recommendation of the Chancellor of the Exchequer, and although the Bank has operational independence, the Treasury retains the authority to set the inflation target.

  • 8 Paul Pierson, “Increasing Returns, Path Dependence, and the Study of Politics”, The American Politi (...)
  • 9 Ibid., p. 262.

7The concept of path dependence has been used by historical institutionalism to describe institutional change, which is generally self-reinforcing and incremental. Self-reinforcing processes narrow the range of possible outcomes and tend to lock in one solution, sometimes at the expense of efficiency. The increasing returns arguments, borrowed from economics to explain path dependence, are even more prevalent in politics because of its specific features, such as weak mechanisms of efficiency-enhancing competition and learning, shorter time horizons, complexity and opacity.8 Where indicators such as balance deficits or inflation may prompt rational choice discussions in economics, it is more difficult to find the metrics helping hold political actors to account. The question of the time horizon was addressed as part of the institutional design of the Bank of England when the length of the Governor’s mandate was extended to a single eight-year term in 2012 – as such, the central bank is not beholden to the election cycle. When granting independence to the Bank of England in 1997, New Labour made a credible commitment that they would no longer interfere with monetary policy, but they also bound their successors in making such a decision costly and difficult to reverse. Political actors deliberately design institutions that are “sticky” with a view to reducing uncertainty, enhancing stability, and binding their successors.9 This does not prevent radical overhaul along the path and one such critical juncture which reinforced the Bank of England’s powers involves a review by the coalition government in 2012 to return to the central bank the role of supervision of banks it had lost in 1997. Further powers were subsequently granted via the Financial Services and Markets Act 2023.

  • 10 Vivien Schmidt, “Discursive Institutionalism: The Explanatory Power of Ideas and Discourse”, Annual (...)
  • 11 Ibid., p. 305.
  • 12 Vivien Schmidt, “Taking Ideas and Discourse Seriously: Explaining Change Through Discursive Institu (...)

8Another way of investigating the resilience and power of institutions is via the discourse they generate, and discursive institutionalism usefully dovetails with path dependence as part of our theoretical framework.10 Discursive institutionalism departs from more deterministic approaches by conceptualizing institutions as constructs rather than merely constraints. It emphasizes the role of agents in shaping institutions through their capacity to formulate ideas and engage in discourse – discourse being understood as an interactive process through which ideas are debated and deliberated within the public sphere, with the potential to be transformed into policies. In that sense, discourse is also about context and agency and encompasses “cognitive ideas” – or the rationale underpinning political action – as well as “normative ideas”, which attach value and justification to political action. Discourse takes a variety of forms such as narratives, myths and collective memories. It may be further broken down into “coordinative” discourse, which circulates among policy actors, and “communicative” discourse, between political actors and the public, and comprises three levels of ideas – policies, programmes and philosophies.11 The study of institutional discourse helps understand how successful ideas – those which eventually become policy – are first elaborated among expert communities and then debated in the political sphere. In a “simple polity” like the UK, the communicative discourse of institutions is often more elaborate than coordinative discourse as the epistemic communities where ideas originate tend to be dominated by a restricted elite which is often more homogenous than in “compound polities” like Germany, where coordinative discourse is often elaborated and negotiated among a larger range of actors.12

  • 13 Michael Barnett and Raymond Duvall, “Power in International Politics”, International Organisation, (...)
  • 14 Martin B. Carstensen and Vivien A. Schmidt, “Power through, over and in Ideas: Conceptualizing Idea (...)
  • 15 Ibid., p. 328.
  • 16 In 2013, the UK moved from to a “twin-peak” model of financial regulation with the Bank of England (...)

9Traditional definitions of institutional power as “actors’ control of others in indirect ways [via] the formal and informal institutions that mediate between A and B13 may thus be reinforced and augmented by the insertion of “power through, over and in ideas”.14 Carstensen and Schmidt single out financial regulation as an area of increasing complexity where the prevalence of market-friendly ideas among background ideational abilities, despite the Global Financial Crisis (GFC) in 2008 undermining and discrediting previous approaches, owes much to “power over ideas” and the discursive abilities of actors with stakes in maintaining the status quo.15 The trajectory of the Bank of England regaining and even reinforcing its powers post-GFC16 could therefore be explained as much by a self-reinforcing path dependency as authority exerted through institutionalized ideas.

  • 17 Andy Haldane, “A Little More Conversation, A Little Less Action”, Speech given at the Federal Reser (...)

10The discourse which is examined as part of this study includes correspondence with the Chancellor of the Exchequer as well as statements, interviews and oral evidence to the Treasury Committee delivered by the Governor of the Bank of England who carries authority in the City of London – which is a private corporation, the financial powerhouse of the UK and a locus of power offsetting that of Whitehall and Westminster. Andy Haldane, former chief economist of the Bank of England, may be seen as helping set in motion a discursive turn at the Bank in 2016, viewing central banks as “narrative entrepreneurs” and introducing multimodal tiered communication in a bid to regain lost trust.17 This study focuses on the coordinative discourse between policy actors and the communicative discourse the Bank of England addressed to the markets, the media and households between 2016 and 2024 as part of a process of persuasion and legitimation around three interventions.

24 June 2016: David Cameron’s resignation and the Bank of England’s response to post-referendum volatility

  • 18 David Cameron, “EU referendum outcome: PM statement”, Prime Minister’s Office, 24 June 2016, https: (...)
  • 19 Katie Allen, Jill Treanor and Simon Goodley, “Pound slumps to 31-low following Brexit vote”, The Gu (...)
  • 20 Mark Carney, “Statement from the Governor of the Bank of England following the EU Referendum Result (...)
  • 21 James Scott, Hussein Kassim and Thomas Warren, “From Big Bang to Brexit: The City of London and the (...)
  • 22 Peter S. Goodman, “As Britain confronts ‘Brexit’, a Canadian Takes Center Stage: Mark Carney”, New (...)

11A major trigger of political instability occurred the day after the UK’s EU membership referendum was held. At approximately 8.15 BST on 24 June 2016, Prime Minister David Cameron emerged from Downing Street, unexpectedly announced his resignation, and walked away from a political turmoil to which he had contributed. Having tied his position to the outcome of the Remain vote, Cameron had in effect little choice but to resign. However, the news still came as a shock and his use of the passive mode in his speech (“delivering stability will be important”)18 betrays his belief that this responsibility no longer fell within his purview, thereby providing little reassurance to the public and the financial markets. The absence of clear policy direction and the leadership vacuum at the highest level of government alarmed investors, leading to the largest one-day depreciation of sterling since the 1970s.19 A more serious slide was prevented in part by an intervention of the Governor of the Bank of England delivering his own statement from a corridor in the Bank’s premises, a rare occurrence and one which was carefully timed to follow the Prime Minister’s address. Mark Carney, the first non-British Governor in the Bank’s long history, stepped in to assume a leadership role: his message centered on the Bank’s contingency plan, which included the allocation of £250 billion of extra funding to prevent a financial crisis. Every element of the Governor’s discourse, from his repeated emphasis on “our responsibilities”, to his calm tone and reassuring body language underscored the key message: “we are well prepared for this”.20 The map for political action (a “cognitive” argument in discursive institutionalism) relied on a revival of the “Bank-Treasury-City nexus” which had been damaged in the wake of the GFC,21 as the Governor emphasized the tight institutional network, while supporting the “real economy” as well as mixing private with public interests to provide the “normative” justification to intervention. The unprecedented 1’51’’ address live on television from the Bank was met with widespread approval from the media and the markets.22

  • 23 House of Commons Treasury Committee, “Oral Evidence: Bank of England Inflation Report”, HC 61, 24 M (...)
  • 24 Ibid, Q114.
  • 25 House of Commons Treasury Committee, “Oral evidence: The economic and Financial Costs and Benefits (...)

12Carney’s “whatever it takes” speech was praised for its effectiveness despite the institution facing criticism from Brexiteers in the lead-up to the referendum. In the oral evidence he presented to the House of Commons Treasury Committee one month prior to the referendum, Carney faced relentless questioning on the Bank of England’s independence. Jacob Rees-Mogg, a notable critic, accused the Bank of having become “a creature of the government” and disseminating their “propaganda”.23 Committee Chair Andrew Tyrie went so far as to accuse Carney of taking orders from his former employer, Goldman Sachs.24 As Carney reasserted the need for the central bank of the UK to inform the British public about the potential consequences of Brexit, the Chair likened the Governor’s careful selection of words to the skill required of a “bomb disposal expert”.25 Those carefully chosen words and staged performance on the morning after Brexit helped provide much-needed stability. The spokesperson of the Bank being a foreigner, who could be perceived therefore as rising above the partisan fray, contributed to maintaining the standing and authority of the Bank of England, in the eyes of market participants.

The Truss mini-budget and the Bank of England: Institutional strain and executive fallout in October 2022

13Another episode illustrating the connection between financial and political stability centres around former Prime Minister Liz Truss’s handling of the mini-budget in October 2022. Specifically, her decision to announce £45 billion in unfunded tax cuts without consulting the Bank of England just three weeks after becoming Prime Minister provoked market disruption and then political instability as she was forced to resign after just 49 days in office. The proposed measures were not previously part of the Conservative Party’s manifesto.

14Officially, the Bank does not interfere with fiscal policy. However, as the events which unfolded in September 2022 show, it cannot ignore its impact and must stand ready to intervene.

  • 26 Faisal Islam, “The Inside Story of the Mini-Budget Disaster”, BBC, 25 September 2023, https://www.b (...)
  • 27 Ibid.
  • 28 House of Commons Treasury Committee, “Oral evidence: Autumn 2022 Fiscal Events, HC 740”, 19 October (...)
  • 29 House of Commons Treasury Committee, “Oral evidence: Bank of England Monetary Policy Reports”, HC 1 (...)
  • 30 Greg Heffer, “MPs gather for Glitzy Westminster Awards Bash as Rishi Sunak Thanks 'the UK bond mark (...)
  • 31 Martin B. Carstensen and Vivien A. Schmidt, “Power and Changing Modes of Governance in the Euro Cri (...)
  • 32 Montagu Norman was the Bank of England’s longest serving Governor (1920-1944): his motto was “never (...)
  • 33 Ed Conway, “Bank of England Head Andrew Bailey Denies Role in Liz Truss's Downfall”, Sky News, 14 N (...)
  • 34 Keneth Rogoff, “The Optimal Degree of Commitment to an Intermediate Monetary Target”, The Quarterly (...)

15Due to lack of communication, the government was unaware that their plan clashed with the Bank's ongoing programme to reduce its balance sheet, known as quantitative tightening. The Chancellor of the Exchequer, Kwasi Kwarteng, had to interrupt a subsequent IMF meeting in Washington to reassure US bankers, politicians, and diplomats that the UK “was committed to fiscal responsibility” and that the Bank of England was “one of the UK's finest institutions”.26 The whole episode turned out to be “a stress test of Britain's entire system of institutions”,27 the Office for Budget Responsibility, the UK’s independent forecaster, having also been sidelined by Truss and Kwarteng in the process. The immediate consequence of the debacle for homeowners and the government was the soaring price of borrowing. The PM felt she had no choice but to U-turn on a corporation tax cut announced in the mini-budget. The oral evidence to the Treasury Committee gathering a month later takes us behind the scenes and broaches interventions further undermining of institutions – for example in the dismissal of the Permanent Secretary at the Treasury, Tom Scholar.28 Andrew Bailey, who had replaced Mark Carney as Governor of the Bank of England in 2020, appeared before the Committee at a later date and was careful not to voice any political comments, restating the limits of the Bank’s remit.29 According to Liz Truss, who went on to lose her constituency seat in the 2024 General Election, the institutional establishment had colluded to defeat her. Her conspiracy theories about the “deep state” aside, this fiscal event and its aftermath raise a few questions as regards the power the Bank of England exercises via its functions. Such powers are all the more striking since the Bank’s operations involve interventions impacting sensitive areas of domestic policy that include mortgages and pension funds – in this instance, the Bank stepped in with a £65 billion emergency facility to try to restore calm in the markets –, and it is worth remembering that Rishi Sunak thanked the bond market for his appointment as her replacement on 25 October 2022.30 Ideational power includes the capacity of framing a crisis response31 and the Bank’s relative silence in the media following this brutal loss of confidence was more reminiscent of the Montagu Norman era32 – see for example Bailey’s laconic statement in a media interview about the political consequences of the mini-budget : “Of course we didn’t depose Liz Truss. I would never do something like that”.33 Governors bring their own communication style to the function but the institutional ethos of the “conservative central banker” prevails.34

  • 35 Chris Clarke and Adrienne Roberts, “Mark Carney and the Gendered Political Economy of British Centr (...)
  • 36 Christopher Adolph, Bankers, Bureaucrats and Central Bank Politics: The Myth of Neutrality (Cambrid (...)
  • 37 Will Dunn, “Why the Bank of England Didn’t Rescue Rishi Sunak”, New Statesman, 20 June 2024, https: (...)

16A study in the gendered political economy of British central banking, based on media coverage around Carney’s appointment, puts forward two ideal-types of masculinity, to which Carney and Bailey conform to some degree, “Transnational Business Masculinity” and “Traditional Bourgeois Masculinity”.35 These gender constructions in finance operate as myths which naturalise and ostensibly depoliticise monetary policy. In the same vein, the aim of promoting the “myth of the neutral central banker36 and removing monetary policy from the short-term electoral gains (and the democratic arena) is to absolve state responsibility. More generally, the Bank of England’s role in the episode of the mini-budget, as well as its decision not to cut interest rates prior to the 2024 General Election – prompting accusations that it had deprived Sunak of his last chance to claim some credit for some good economic news –, contributed to fuel long-burning resentment against central bank independence among the right wing of the Conservative Party.37

Framing monetary policy: The Bank of England, quantitative easing, and the politics of communication since 2016

  • 38 QE was first experimented in Japan in 2001, and then in the US in 2009, with mixed results.
  • 39 Wealth distribution in the UK is already highly skewed: “around 50 per cent of total wealth is held (...)
  • 40 Ibid.

17This third line of enquiry examines coordinative and communicative discourse around quantitative easing, a relatively untested form of monetary policy before it came into application in the aftermath of the GFC, when interest rates were lowered to the zero bound with little effect on inflation.38 It was resorted to again in response to the Covid pandemic, in order to provide economic stimulus. QE involves central banks buying safe financial assets, such as long-term government bonds, from commercial banks so that the latter can start lending again. Broadly, when the Bank of England buys debt on the bond market, the expectation is that the cost of borrowing (i.e. long-term interest rates) falls. Economists are divided on the use and distributional effects of QE. A widespread perception is that cheap borrowing did not lead to increased consumption but instead paved the way to funding technology, the gig economy, the proliferation of zero-hours contracts and wage stagnation, while private sector banks saw their reserves increase. Another adverse effect was to drive investment towards more lucrative assets, such as stocks, property or luxury goods, thereby inflating their value and making those who could afford them richer – not increasing general consumption. The Resolution Foundation paints a more nuanced picture: QE also supports economic activity, including employment and wage growth, if used as a short-term tool.39 Still, its 2018 survey shows that only 4 per cent of MPs thought use of QE in the future was “definitely advisable”.40

  • 41 Will Dunn, “The QE theory of Everything”, New Statesman, 1-7 March 2024, p. 22.

18QE may have contributed to the polarised politics of today: according to Will Dunn for the New Statesman, the “left behind” were not the consequence of globalization, but finance: “however, because it’s hard to get angry at complex central bank policies, the people in these areas got angry at something more familiar: other people”.41 He believes QE was the trigger to Brexit and to the rise in power of social media: the Brexit vote was a reaction against immigration and the “technocratic elite” who had promised to fix the GFC, and social media because Big Tech benefited from the rush to invest in riskier assets than bonds – QE provided Elon Musk with the means to buy Twitter and command the power he now uses to take aim at the UK’s government.

  • 42 Bank of England’s Independent Evaluation Office, IEO evaluation of the Bank of England’s Approach t (...)

Chart 1: Bank of England QE programmes and selected policy interventions, 2009-202142

Chart 1: Bank of England QE programmes and selected policy interventions, 2009-202142
  • 43 HMT Open letters between the Governor of the Bank of England and the Chancellor of the Exchequer, h (...)
  • 44Active monetary policy is a key part of our economic plan”, George Osborne, The Chancellor’s Annua (...)
  • 45 Bank of England, IEO evaluation of the Bank of England’s Approach to Quantitative Easing, 13 Januar (...)
  • 46 Ibid.
  • 47 House of Lords Economic Affairs Committee, 1st Report of Session 2021-2022, “Quantitative Easing: A (...)
  • 48 This is because any increase in interest rates might jeopardise the government’s spending plans pos (...)
  • 49 Harry Lambert, “Mervyn King: ‘The Bank of England made a terrible mistake’ – The former Governor of (...)

19The Bank of England launched QE in five tranches from 2009 to 2022 (Chart 1), totalling £895bn. The Governor has to inform the Chancellor in an open letter of the Bank’s choice of direction; however all Chancellors seemingly went along with the experiment, trusting the expertise of the Bank.43 George Osborne even praised monetary activism in his 2013 Mansion House speech, when Mark Carney was appointed Governor.44 Other coordinative discourse includes an internal assessment of the Bank’s approach to QE that was commissioned by the Bank’s Court in 2019 and published in 2021.45 Recognising that the public’s trust and understanding of the tool is important for the Bank’s mission, the report recommends making complex issues more “relatable to the public” through the use of storytelling and alternative wording: instead of explaining QE in terms of “injecting” or “printing” money, it suggests “framing QE as a change in an interest rate rather than the creation of a quantity of money” in order to “reduce the perception that QE is a transfer of wealth to the rich or to banks”.46 The Bank’s internal advisers therefore provide rhetorical means to “frame” QE in a positive light and silence the negative spillover effects of QE. Finally, in July 2021, the House of Lords Economic Affairs Committee debated on the “dangerous addiction” that may have become QE, concluding that its impact on the real economy remained “limited” and “poorly understood”, and observing that “central bank research tends to show quantitative easing in a more positive light than the academic literature”.47 It had even led to perceptions that the Bank of England had become politicised.48 One of the members of the Committee that led the charge against the Bank of England for failing to provide enough justifications for its flagship policy was Mervyn King, the former Governor of the Bank who had introduced the policy in 2013.49

20The effectiveness of the Bank's communication about QE can be assessed through its coverage by the British press. Chart 2 illustrates how text analysis tracks media attention to QE over time. The analysis examines articles that contain terminology related to both QE and specialized financial and economic concepts. The study encompasses three British newspapers representing diverse political perspectives. All articles are categorized within three specific domains: Commodity/Financial Market News, Corporate/Industrial News, and Economic News. This quantitative review shows that media interest in QE petering after a peak in 2016. The reduced media attention may both reflect and influence public engagement with QE-related issues. It also indicates a broader lack of public awareness regarding the consequences of QE.

  • 50 The available data extends only through January 2019, thus excluding the fifth round of QE (Bank of (...)

Chart 2. Frequency of articles mentioning QE in the Daily Mail, the Guardian and the Mirror (Jan 2009-Jan 2019), Dow Jones Factiva and Bank of England calculations50

Chart 2. Frequency of articles mentioning QE in the Daily Mail, the Guardian and the Mirror (Jan 2009-Jan 2019), Dow Jones Factiva and Bank of England calculations50
  • 51 George Parker, “Mark Carney Endorses Labour’s Shadow Chancellor Rachel Reeves”, Financial Times, 9 (...)

21Certainly, the continuing role of QE and that of the Bank in the case of Brexit and the Truss premiership illustrate the critical and central role of the Bank in British economic and political life. The symbiotic link between economic stability and political stability is perhaps best illustrated by the relationship between the Treasury and the Bank of England, which has been tested in all manners of ways in recent Parliaments. The appointment of the first female Chancellor of the Exchequer, who was previously a Bank of England employee, supported publicly by a previous Governor and other voices in the City,51 adds a further dimension to the power of discursive institutionalism.

Conclusion

22In the wake of two referendums, a global pandemic, cost-of-living crisis and criminal proceedings involving leading political figures in Westminster and Holyrood, the guiding institutional hand of the Bank of England has helped limit the instability wrought by political churn. Policy solutions were deployed in the guise of coordinative and communicative discourses aimed at influencing reform and persuading the public, while maintaining the status quo when it came to underlying assumptions and philosophies. Historical institutionalism helps explain how institutions follow path-dependent trajectories with lock-in effects at critical junctures – the GFC and Brexit were such critical moments for the Bank of England – and discursive institutionalism helps explain what was in practice incremental, relying on agents’ background ideational and foreground discursive abilities.

  • 52 Andrew Bailey, “Growth”, Speech given at the Mansion House Financial and Professional Services Dinn (...)

23Pledging an approach radically different to that of Liz Truss in 2022, Rachel Reeves said she would seek to strengthen rather than reshape key institutions in the run-up to the General Election: “Stability is change” was subsequently repeated as a political slogan throughout the Labour campaign. The Bank of England featured among those institutions whose independence the incoming government pledged to safeguard. Interestingly, the Governor unexpectedly backed a closer working relationship with the EU at his October 2024 Mansion House address, in a speech seemingly meant to echo the wishes of the Chancellor to “reset” the UK’s relationship with the EU.52

  • 53 The Economist, “America’s Trust in Its Institutions Has Collapsed”, 17 August 2024, https://www.eco (...)
  • 54 Despite the narrow statutory remit set to the UK central bank, these Bank officials have been seen (...)
  • 55 In discursive institutionalism, this refers to ideas that underlie policies and programmes, which a (...)

24Furthermore, Britain ranks near the top of the G7 league table when it comes to the population’s trust in its institutions, a position which has not changed over the past twenty years – by contrast, Americans’ trust in several of their key institutions suffered the biggest decline as the US ranked bottom of the G7 table in 2024.53 One of the explanations propounded by institutional research is the adoption, by a subset of Bank of England officials including the Governors, of the language of “inclusive capitalism”.54 The Bank of England has thus used its powers to redraw the boundaries between institutions and spheres of practice. Such attempts at hegemonic ideology carry the risk of politicising the institution. Their strategic use of discourse is used partly as a mechanism of institutional self-preservation but also to provide more normative views on how capitalism should be governed. Re-legitimising global capitalism, however, does not amount to a major shift in the “philosophy55 underpinning the current institutional framework.

  • 56 Georgina Cutler, “Britons ‘Need to Accept’ Being Poorer Says Bank of England Economist on £190k Sal (...)
  • 57 Adam Blanden, “‘A sense of the systemic’”, op.cit., p. 1538.
  • 58 Benjamin Braun, “Central Planning for Public Purpose”, in Didier Fassin and Marion Fourcade (eds) P (...)
  • 59 Nelson Phillips, Thomas B. Lawrence and Cynthia Hardy, “Discourse and Institutions”, Academy of Man (...)

25With concerns about the cost-of-living crisis remaining high, the discourse of inclusive capitalism is likely to be less rather than more audible – and communication mishaps happen, notably when the Bank has urged workers to refrain from seeking pay increases, thereby attracting criticism from trade unions and others.56 Moreover, eleven years of QE have potentially planted the seeds of further unrest with commentators, broadcasters and politicians highlighting how its efforts have benefited mainly financial institutions rather than the taxpayers who bailed out the UK banks post-GFC. Future instability may arise from tensions between right-wing forces seeking to disembed states from global governance, and technocratic forces attempting to re-embed markets in the social sphere, representing an “inversion of the Polanyian dynamic”.57 The empowerment of unelected central bankers has placed monetary policy beyond the reach of governments. Correcting the inefficiency and inequity of the current modes of capital allocation would require building a new macro-financial regime and redeploying instruments in a coordinated way between technocracy, democracy and capitalism.58 The current shift of ownership of debt and capital away from public bodies to private institutions and financial actors is likely to weaken further political actors. The upshot is that institutions are not merely static structures of privilege and power: they are “discursive products” who compete in a contested political arena.59

  • 60 Indeed the coming to office of President Trump and Prime Minister Carney reflect a new political re (...)
  • 61 Hyman P. Minsky, “The Financial Instability Hypothesis: A Restatement”, 1978, Hyman P. Minsky Archi (...)

26If the Bank has helped the country and its governments weather a period of political instability in Westminster fuelled by Brexit and Covid, the challenge facing the Bank and the government remains an ongoing series of known knowns (such as the cost of living and borrowing), known unknowns (the increasing influence of AI) and unknown unknowns. Stability is unlikely to be the norm60 and even if it were, as Hyman Minsky noted, “stability leads to instability. The more stable things become and the longer things are stable, the more unstable they will be when the crisis hits”.61

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Bibliography

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Heffer, Greg, “MPs Gather for Glitzy Westminster Awards Bash as Rishi Sunak Thanks 'the UK Bond Markets' As He Scoops 'Comeback of the Year' Gong”, 24 November 2022, Mail Online, https://www.dailymail.co.uk/news/article-11465269/Rishi-Sunak-thanks-UK-bond-markets-scoops-comeback-year-MPs-awards-bash.html, consulted 8 July 2025.

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House of Commons Treasury Committee, “Oral evidence: Bank of England Inflation Report”, HC 61, 24 May 2016, Q48 & Q56, https://committees.parliament.uk/oralevidence/5701/pdf/, consulted 8 July 2025.

House of Commons Treasury Committee, “Oral evidence: Autumn 2022 Fiscal Events, HC 740”, 19 October 2022, Q80-81, https://committees.parliament.uk/oralevidence/11373/pdf/, consulted 8 July 2025.

House of Commons Treasury Committee, “Oral Evidence: Bank of England Monetary Policy Reports”, HC 143, 16 November 2022, https://committees.parliament.uk/oralevidence/11551/default/, consulted 8 July 2025.

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Parker, George, “Liz Truss Considered Sacking Andrew Bailey as BoE Governor After Mini-Budget”, Financial Times, 16 April 2024, https://www.ft.com/content/cf64f93d-91da-4ff6-9c58-c0c3ad404d99, consulted 8 July 2025.

Parker, George, “Mark Carney Endorses Labour’s Shadow Chancellor Rachel Reeves”, Financial Times, 9 October 2024, https://www.ft.com/content/13aeb762-5636-4423-b964-9128e2d9137d, consulted 8 July 2025.

Phillips, Nelson, Lawrence, Thomas B. and Hardy, Cynthia, “Discourse and Institutions”, Academy of Management Review, 29:4 (2004), pp. 635-652.

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Schmidt, Vivien, “Discursive Institutionalism: The Explanatory Power of Ideas and Discourse”, Annual Review of Political Science, 11 (June 2008), pp. 303-326.

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Scott, James, Kassim, Hussein and Warren, Thomas, “From Big Bang to Brexit: The City of London and the Discursive Power of Finance”, Political Studies, 70:3 (February 2021), pp. 719-738.

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Notes

1 The laureates were Daron Acemoglu (Massachusetts Institute of Technology, Cambridge, USA), Simon Johnson (Massachusetts Institute of Technology, Cambridge, USA) and James A. Robinson (University of Chicago, IL, USA) “for studies of how institutions are formed and affect prosperity”, The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, 14 October 2024, https://www.nobelprize.org/prizes/economic-sciences/2024/press-release/, consulted 8 July 2025.

2 Rachel Reeves, The 2024 Mais Lecture, Baynes Business School, 19 March 2024, https://labour.org.uk/updates/press-releases/rachel-reeves-mais-lecture/, consulted 8 July 2025.

3 Interview with Faisal Islam, ITV, 3 June 2016, https://www.youtube.com/watch?v=GGgiGtJk7MA, consulted 8 July 2025. Questioning the authority and the credibility of experts from independent institutions led to a schism, as Paul Tucker, himself a former Bank of England official, puts it, between “hyper-depoliticised technocracy and hyper-politicised populism, each fueling the other in attempts, respectively, to maintain effective government and to reestablish majoritarian sensibility”, Paul Tucker, Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State (Princeton and Oxford, Princeton University Press, 2018), p. 2.

4 Wolfgang Streeck and Kathleen Thelen, Beyond continuity – Institutional Change in Advanced Political Economies (Oxford, Oxford University Press, 2005), p. 9.

5 Douglass C. North, Institutions, Institutional Change and Economic Performance (Cambridge, Cambridge University Press, 1990), pp. 3-5.

6 Ibid., pp. 94-95.

7Broadly speaking, political rules in place lead to economic rules, though the causality runs both ways”, ibid.

8 Paul Pierson, “Increasing Returns, Path Dependence, and the Study of Politics”, The American Political Science Review, 94:2, June 2000, pp. 257-262.

9 Ibid., p. 262.

10 Vivien Schmidt, “Discursive Institutionalism: The Explanatory Power of Ideas and Discourse”, Annual Review of Political Science, 11, June 2008, pp 303-326.

11 Ibid., p. 305.

12 Vivien Schmidt, “Taking Ideas and Discourse Seriously: Explaining Change Through Discursive Institutionalism as the Fourth ‘New Institutionalism’”, European Political Science Review, 2:1, March 2010, p. 23.

13 Michael Barnett and Raymond Duvall, “Power in International Politics”, International Organisation, 59:1 Winter 2005, p. 51. Power is viewed here in its broadest sense as a means of controlling the political agenda and securing compliance without triggering grievances, as domination has come to be seen as legitimate via institutional procedures and rituals which shape the “rules of the game”. See also Steven Lukes, Power – A Radical View (London: Bloomsbury Academic, 2021), p. 30.

14 Martin B. Carstensen and Vivien A. Schmidt, “Power through, over and in Ideas: Conceptualizing Ideational Power in Discursive Institutionalism”, Journal of European Public Policy, 23:3, 2016, pp. 318-337.

15 Ibid., p. 328.

16 In 2013, the UK moved from to a “twin-peak” model of financial regulation with the Bank of England housing two new regulatory bodies (Financial Services Act 2013, https://www.legislation.gov.uk/ukpga/2013/33/contents, consulted 8 July 2025)

17 Andy Haldane, “A Little More Conversation, A Little Less Action”, Speech given at the Federal Reserve Bank of San Francisco, Macroeconomic and Monetary Policy Conference, 31 March 2017, https://www.bankofengland.co.uk/speech/2017/a-little-more-conversation-a-little-less-action, consulted 8 July 2025.

18 David Cameron, “EU referendum outcome: PM statement”, Prime Minister’s Office, 24 June 2016, https://www.gov.uk/government/speeches/eu-referendum-outcome-pm-statement-24-june-2016, consulted 8 July 2025.

19 Katie Allen, Jill Treanor and Simon Goodley, “Pound slumps to 31-low following Brexit vote”, The Guardian, 24 June 2016, https://www.theguardian.com/business/2016/jun/23/british-pound-given-boost-by-projected-remain-win-in-eu-referendum, consulted 8 July 2025.

20 Mark Carney, “Statement from the Governor of the Bank of England following the EU Referendum Result”, Bank of England, 24 June 2016, https://www.bankofengland.co.uk/news/2016/june/statement-from-the-governor-of-the-boe-following-the-eu-referendum-result, consulted 8 July 2025.

21 James Scott, Hussein Kassim and Thomas Warren, “From Big Bang to Brexit: The City of London and the Discursive Power of Finance”, Political Studies, 70:3, February 2021, pp. 719-738.

22 Peter S. Goodman, “As Britain confronts ‘Brexit’, a Canadian Takes Center Stage: Mark Carney”, New York Times, 15 September 2016, https://www.nytimes.com/2016/09/16/business/international/bank-of-england-brexit-carney.html, consulted 8 July 2025.

23 House of Commons Treasury Committee, “Oral Evidence: Bank of England Inflation Report”, HC 61, 24 May 2016, Q48 & Q56, https://committees.parliament.uk/oralevidence/5701/pdf/, consulted 8 July 2025.

24 Ibid, Q114.

25 House of Commons Treasury Committee, “Oral evidence: The economic and Financial Costs and Benefits of UK Membership of the EU”, HC499, 8 March 2016, Questions Q1008 & Q1068, https://committees.parliament.uk/oralevidence/5464/pdf/, consulted 8 July 2025.

26 Faisal Islam, “The Inside Story of the Mini-Budget Disaster”, BBC, 25 September 2023, https://www.bbc.com/news/business-66897881, consulted 8 July 2025.

27 Ibid.

28 House of Commons Treasury Committee, “Oral evidence: Autumn 2022 Fiscal Events, HC 740”, 19 October 2022, Q80-81, https://committees.parliament.uk/oralevidence/11373/pdf/, consulted 8 July 2025. In her memoir, Liz Truss also accuses the Governor, despite being politically neutral, of blocking Kwarteng’s preferred candidate to take over as permanent secretary at the Treasury (George Parker, “Liz Truss Considered Sacking Andrew Bailey as BoE Governor after Mini-Budget”, Financial Times, 16 April 2024, https://www.ft.com/content/cf64f93d-91da-4ff6-9c58-c0c3ad404d99, consulted 8 July 2025).

29 House of Commons Treasury Committee, “Oral evidence: Bank of England Monetary Policy Reports”, HC 143, 16 November 2022, https://committees.parliament.uk/oralevidence/11551/default/, consulted 8 July 2025.

30 Greg Heffer, “MPs gather for Glitzy Westminster Awards Bash as Rishi Sunak Thanks 'the UK bond markets' As He Scoops 'Comeback of the Year' Gong”, Mail Online, 24 November 2022, https://www.dailymail.co.uk/news/article-11465269/Rishi-Sunak-thanks-UK-bond-markets-scoops-comeback-year-MPs-awards-bash.html, consulted 8 July 2025.

31 Martin B. Carstensen and Vivien A. Schmidt, “Power and Changing Modes of Governance in the Euro Crisis”, Governance, 31:4, October 2017, p. 613.

32 Montagu Norman was the Bank of England’s longest serving Governor (1920-1944): his motto was “never explain, never apologise”.

33 Ed Conway, “Bank of England Head Andrew Bailey Denies Role in Liz Truss's Downfall”, Sky News, 14 November 2022, https://news.sky.com/story/bank-of-england-head-andrew-bailey-denies-role-in-liz-trusss-downfall-12747640, consulted 8 July 2025.

34 Keneth Rogoff, “The Optimal Degree of Commitment to an Intermediate Monetary Target”, The Quarterly Journal of Economics, 100:4, November 1985, pp. 1169-1189.

35 Chris Clarke and Adrienne Roberts, “Mark Carney and the Gendered Political Economy of British Central Banking”, The British Journal of Politics and International Relations, 18:1, 2016, p. 50.

36 Christopher Adolph, Bankers, Bureaucrats and Central Bank Politics: The Myth of Neutrality (Cambridge: Cambridge University Press, 2013).

37 Will Dunn, “Why the Bank of England Didn’t Rescue Rishi Sunak”, New Statesman, 20 June 2024, https://www.newstatesman.com/business/economics/2024/06/why-the-bank-of-england-didnt-rescue-rishi-sunak, consulted 8 July 2025.

38 QE was first experimented in Japan in 2001, and then in the US in 2009, with mixed results.

39 Wealth distribution in the UK is already highly skewed: “around 50 per cent of total wealth is held by the highest wealth decile: a rise in asset prices directly benefits those already holding those assets”, Joseph E. Gagnon et al., “Quantitative (Displ)easing? Does QE work and should it be used next time?”, Resolution Foundation, September 2019, p. 9.

40 Ibid.

41 Will Dunn, “The QE theory of Everything”, New Statesman, 1-7 March 2024, p. 22.

42 Bank of England’s Independent Evaluation Office, IEO evaluation of the Bank of England’s Approach to Quantitative Easing, 13 January 2021, https://www.bankofengland.co.uk/independent-evaluation-office/ieo-report-january-2021/ieo-evaluation-of-the-bank-of-englands-approach-to-quantitative-easing, consulted 8 July 2025.

43 HMT Open letters between the Governor of the Bank of England and the Chancellor of the Exchequer, https://www.gov.uk/government/collections/inflationary-targets, consulted 8 July 2025.

44Active monetary policy is a key part of our economic plan”, George Osborne, The Chancellor’s Annual Mansion House Speech, HM Treasury, 19 June 2013, https://www.gov.uk/government/speeches/speech-by-chancellor-of-the-exchequer-rt-hon-george-osborne-mp-mansion-house-2013, consulted 8 July 2025.

45 Bank of England, IEO evaluation of the Bank of England’s Approach to Quantitative Easing, 13 January 2021, https://www.bankofengland.co.uk/independent-evaluation-office/ieo-report-january-2021/ieo-evaluation-of-the-bank-of-englands-approach-to-quantitative-easing, consulted 8 July 2025.

46 Ibid.

47 House of Lords Economic Affairs Committee, 1st Report of Session 2021-2022, “Quantitative Easing: A Dangerous Addiction?”, 16 July 2021, https://committees.parliament.uk/publications/6725/documents/71894/default/, consulted 8 July 2025.

48 This is because any increase in interest rates might jeopardise the government’s spending plans post-QE and therefore the Bank might come under pressure not to increase interest rates.

49 Harry Lambert, “Mervyn King: ‘The Bank of England made a terrible mistake’ – The former Governor of the Bank on what Kwasi Kwarteng got wrong and how quantitative easing helped fuel the inflation crisis”, New Statesman, 12 October 2022, https://www.newstatesman.com/encounter/2022/10/mervyn-king-the-bank-of-england-made-a-terrible-mistake, consulted 8 July 2025.

50 The available data extends only through January 2019, thus excluding the fifth round of QE (Bank of England’s Independent Evaluation Office, IEO Evaluation of the Bank of England’s Approach to Quantitative Easing, 13 January 2021, https://www.bankofengland.co.uk/independent-evaluation-office/ieo-report-january-2021/ieo-evaluation-of-the-bank-of-englands-approach-to-quantitative-easing, consulted 8 July 2025.

51 George Parker, “Mark Carney Endorses Labour’s Shadow Chancellor Rachel Reeves”, Financial Times, 9 October 2024, https://www.ft.com/content/13aeb762-5636-4423-b964-9128e2d9137d, consulted 8 July 2025.

52 Andrew Bailey, “Growth”, Speech given at the Mansion House Financial and Professional Services Dinner, 14 November 2024, https://www.bankofengland.co.uk/speech/2024/november/andrew-bailey-speech-at-the-annual-financial-and-professional-services-dinner, consulted 8 July 2025.

53 The Economist, “America’s Trust in Its Institutions Has Collapsed”, 17 August 2024, https://www.economist.com/united-states/2024/04/17/americas-trust-in-its-institutions-has-collapsed, consulted 8 July 2025.

54 Despite the narrow statutory remit set to the UK central bank, these Bank officials have been seen and heard, post-GFC, to raise progressive issues ranging from inequality to climate change. “Redrawing the boundaries of institutional fields” around the social sphere as an area of consensus-forming which stands in contrast to the excesses of both market and partisan politics, these “ boundary-walking organic intellectuals” of global capitalism have been attempting to promote a “globalisation that works for all” (Adam Blanden, “‘A sense of the Systemic’: The Bank of England and the language of inclusive capitalism”, Review of International Political Economy, 31:5, 4 April 2024, pp. 1520-1543.

55 In discursive institutionalism, this refers to ideas that underlie policies and programmes, which are often unarticulated as background knowledge and therefore rarely contested.

56 Georgina Cutler, “Britons ‘Need to Accept’ Being Poorer Says Bank of England Economist on £190k Salary”, GB News, 26 April 2023, https://www.gbnews.com/money/bank-of-england-accept-being-poor-huw-pill, consulted 8 July 2025.

57 Adam Blanden, “‘A sense of the systemic’”, op.cit., p. 1538.

58 Benjamin Braun, “Central Planning for Public Purpose”, in Didier Fassin and Marion Fourcade (eds) Pandemic Exposures: Economy and Society in the Time of Coronavirus (Chicago, HAU Books, 2021), pp. 105-121.

59 Nelson Phillips, Thomas B. Lawrence and Cynthia Hardy, “Discourse and Institutions”, Academy of Management Review, 29:4, 2004, p. 638.

60 Indeed the coming to office of President Trump and Prime Minister Carney reflect a new political reality which forms part of the Bank’s own challenges in ensuring UK financial stability within the global economy.

61 Hyman P. Minsky, “The Financial Instability Hypothesis: A Restatement”, 1978, Hyman P. Minsky Archive, Paper 180, https://digitalcommons.bard.edu/hm_archive/180, consulted 8 July 2025.

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List of illustrations

Title Chart 1: Bank of England QE programmes and selected policy interventions, 2009-202142
URL http://journals.openedition.org/rfcb/docannexe/image/14434/img-1.png
File image/png, 55k
Title Chart 2. Frequency of articles mentioning QE in the Daily Mail, the Guardian and the Mirror (Jan 2009-Jan 2019), Dow Jones Factiva and Bank of England calculations50
URL http://journals.openedition.org/rfcb/docannexe/image/14434/img-2.png
File image/png, 37k
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References

Electronic reference

Laurence Harris, “Institutional Power and Political Stability – Three Key Interventions by the Bank of England (2016-2024)”Revue Française de Civilisation Britannique [Online], XXX-3 | 2025, Online since 15 September 2025, connection on 15 December 2025. URL: http://journals.openedition.org/rfcb/14434; DOI: https://doi.org/10.4000/14qki

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About the author

Laurence Harris

Laurence Harris is a senior lecturer in British studies at Sorbonne Nouvelle University, where she conducts her research on British institutions as a member of CREW.

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